Lease Fraud and Auto Fraud in New Jersey
The New Jersey Legislature has passed some very effective consumer laws pertaining to the leasing of automobiles. There are some very specific disclosure requirements on leases.
A violation of the Consumer Leasing Act also is a violation of the Consumer Fraud Act and you can seek triple damages plus fees and costs.
The laws that have been adopted by the state of New Jersey to protect those leasing vehicles are very powerful. Selling dealer’s, leasing dealers and finance companies have various obligations under the New Jersey leasing laws. There must be numerous disclosures with regard to exactly the terms and conditions of the lease. There also must be extensive disclosure with regard to the description of the collateral.
There are separate laws for the repossession of leased vehicles. Under most circumstances the lessee of a vehicle has one opportunity to cure a default of the lease for nonpayment during the lease term. If the lessee misses a payment the lessor must give the lessee approximately 15 days to make good on the payment. This must be done for the vehicles repossessed. If the repossession occurs before this opportunity to cure the default it is a violation of the New Jersey Consumer Fraud Act. This is wrongful repossession. However, after the 15 day notice is given the lessor may repossess the vehicle at any time so long as it complies with New Jersey laws.
In New Jersey there is a 24 hour time period in which a lessee may review the documents and canceled the transaction. However there is also a provision in the law which permits a waiver of this obligation. You have to review the lease very carefully to make sure the love not waived this 24 hour time period to review the lease. In my experience, it is standard language in the lease to waive the 24 hour right to review. Thus, if you specifically want to take this vehicle home and review the documents you must review the documents carefully to make sure you do not sign this waiver.
The fraud associated with the leasing of automobiles is not much different than the fraud associated with the sale or financing of automobiles. Automobile dealerships in their salesman take advantage of customers by using deceptive acts and practices associated with the lease of automobiles same as they use his tactics with the financing or sale of automobiles. They lease automobiles that of been damaged. They engage in bait and switch on advertising for automobiles that are being leased. The advertising associated with the leasing of automobiles can be even more deceptive than the advertising associated with the regular sale of automobiles. The sale of the automobile at least you know what the interest rate is. There is an internal interest rate in the lease transaction however this interest rate is not disclosed. Thus, the consumer is in inherent advantage in a lease transaction as opposed to a finance or purchase transaction because the true cost of the transaction is not disclosed. When you purchase a car you know the industry. When you lease a car you do not know the interest rate despite the existence of an internal interest rate or in internal rate of return on the transaction.
The New Jersey Consumer Fraud Act applies to both the sale and lease of automobiles however specific sections of the Administrative Code and the specific sections of the New Jersey Statutes might differ somewhat on lease transactions as opposed to purchase transactions.
Again the New Jersey Consumer Fraud Act will protect consumers who have sustained an ascertainable loss associated with the lease of a vehicle which is a direct result of a deceptive practice or deceptive business practice with an affirmative misrepresentation of fact.
Motor vehicle lease transactions are significantly more complicated than regular purchase transactions. The higher level of difficulty in reviewing the paperwork and understanding the financial consequences of the transaction provide significant opportunities for consumers to be misled by unscrupulous salespeople. The Consumer Leasing Act sets forth a litany of disclosures, disclaimers, and requirements for leases. In theory this is supposed to help consumers. However, the waterfall of information could potentially be confusing especially if this is your first lease transaction. The Consumer Leasing Act provides for disclosures of many factors suggested retail price, payments, costs, residual value, and other particulars. These disclosures are relevant to your decision to lease a car rather than purchase the vehicle. The lease buyout provision must be examined and researched.
This is also known as residual value. You should research residual value on the Internet before you acquire the vehicle. You need to estimate based on the miles you intend to put on the vehicle what the residual value might be at the end of the lease. The more miles you put on the lease the less valuable a lease. For example: The buyout might be $20,000. However, you might drive the vehicle significantly and after 3 years you might anticipate that the vehicle will have little or no value. Under the circumstances a lease with a large buyout amount might not be economically feasible for one who puts on many miles.
The other thing you should do as compared to secure financing. You can see what the costs of the vehicle will be leasing the vehicle supposed to financing the vehicle. Usually, the more miles you put on the vehicle the last feasible leasing becomes. However, leasing a vehicle like the only way to drive an expensive car. To lease a $50,000 car might be $5-$600 a month. However, to purchase the same vehicle over a 4- or 5-year time span the payments might be $1,000. This is also another consideration in leasing the vehicle. Affordability.
However, as previously stated, you need to examine the lease work out sheet which contains the manufacturer's suggested retail price, the agreed upon value of the vehicle and the residual value. All these factors are relevant consideration if you are going to lease a vehicle.
One of the common items, or areas of concern (Consumer Fraud in a Lease) is the agreed upon value the vehicle as compared to manufacturer’s suggested retail price. Compare the agreed to price of a vehicle with the manufacturer's suggested retail price. If you are purchasing the vehicle you might never agree to pay MSRP. However, you might not even realize that the lease payments are based on a very high price that might never occur in a purchase transaction.
Consumer Fraud or even confusion can occur here. Consumer Fraud Trials can long a difficult and might require a week to try to conclusion.